It feels like it was just yesterday when we were watching the price of houses skyrocket and scratching our heads at the pace of the market. Now it seems the tide is turning; the national median price of existing single-family homes, condos, and co-ops are starting to fall. In November 2023, they dropped to $387,600, a 6.3% decrease from the peak in June 2022, as per the National Association of Realtors (NAR) data.
This shift has brought about three noticeable trends that are worthy of further exploration. Let’s unravel them!
The Surprising Surge in New Listings
Contrary to typical seasonal patterns, new listings didn’t dive into hibernation this November. Instead, they thrived! Compared to data from Realtor.com, new listings actually increased, rising to a praiseworthy 354,900. Furthermore, they hadn’t suffered a significant dip throughout the second half of the year. Quite a deviation from the norm, wouldn’t you agree?
Active Listings are Climbing
Keeping in the theme of surprises, active listings have also ascended to 754,800 homes in November 2023, reaching the highest point since two years earlier in August 2020. Those active listings, which differ from inventory by excluding homes listed as “sales pending”, broke the pattern prior to the pandemic of decreasing during those fall months. The slow and steady growth is an interesting highlight amidst the home market happenings.
Inventory & Demand Dynamics
The baffling developments continue with inventory, ticking up by 1% year-over-year – the first increase since April. It currently stands at nearly 1.13 million homes. On the contrary, demand remains underwater. Existing home sales improved slightly to a seasonally adjusted annual rate of 3.82 million in November from October’s collapsed levels but still remain significantly lower than previous years. It’s definitely a divergent dynamic to observe.
To help contextualize these points, let’s touch on home builders and homebuyers’ roles in this home-market quagmire. Builders, for instance, have been adjusting to the changing tides by downsizing on property offerings and reducing prices. Such adjustments seem to be paying off as they’re successfully competing with homeowners looking to sell.
Homeowners, on the other hand, are starting to list their once-vacant homes, previously held to ride the wave of price increase. These homes now entering the market are leading to this surge in new listings. Yet, demand remains deflated, contributing to a mix of inventory growth and lowered sales.
In a nutshell, the housing market is undergoing a fascinating shift. The rise in new and active listings coupled with an increase in inventory, juxtaposed against a demand deficit, paints a complex picture. Securing an up-close seat to watch this unfolding drama can indeed be quite the treat for investors. We’re keeping an eagle’s eye on where these changes lead us. Only time will tell!